Co-Operative Society's Application for Ruling on Mutuality and Facilitator Transactions Rejected at Threshold — Both Section 97(2) Scope and Section 98(2) Bar Apply: Kerala AAR

The Kerala Authority for Advance Ruling has rejected at threshold the application filed by M/s Indian Co-Operative Credit Society Limited, a multi-state co-operative credit society, seeking a ruling on whether transactions with its member-facilitators are exempt from GST under the principle of mutuality or alternatively under the business facilitator exemption in Notification No. 12/2017-CT(Rate). The Authority held that the questions fall outside the scope of Section 97(2) (as they relate to supplies by facilitators to the applicant, not by the applicant) and are additionally barred under Section 98(2) (as the issue has already been adjudicated). The ruling was passed by Shri Jomy Jacob and Shri Mansur M.I. on 23.03.2026 in Application No. KER/02/2026.

The applicant operates across Karnataka, Tamil Nadu, Kerala and Andhra Pradesh, providing credit facilities and accepting deposits exclusively from members. Certain members designated as "facilitators" assist in arranging lending and deposit activities, and the Society shares certain amounts with them. The applicant contended that under the Supreme Court's ruling in Calcutta Club and the Kerala HC's ruling in Indian Medical Association (which struck down Section 7(1)(aa) as ultra vires), the principle of mutuality applies and no GST is leviable.

The Authority declined to rule on two independent grounds. First, the questions raised relate to services rendered by facilitators to the applicant — not to any supply made by the applicant — and Section 97(2) empowers the Authority to rule only on supplies made by the applicant. Second, the jurisdictional officer reported that the identical issue (taxability of transactions between the Society and its members) had already been adjudicated in OIO No. 21/2023-24-GST(ADJ) dated 26.03.2024 and upheld in OIA No. 164-2025-26-JC dated 25.09.2025, triggering the bar under Section 98(2).

The Authority also noted that the Department has challenged the Kerala HC's Indian Medical Association judgment before the Supreme Court in SLP (Civil) No. 55454 of 2024, and the matter is sub judice. The Department's position — that transactions between societies and their members are taxable as supplies between distinct persons after the Section 7(1)(aa) amendment — remains operative pending the Supreme Court's decision.